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November 12, 2002

Economist on Microsoft Trial

I haven't written anything since the court upheld the weak-ass Justice Department settlement with Microsoft, partly because I have written so much over the years-- see my Tech page with my work from NetAction.

My basic reaction was in my article written after the Appeals Court overturned the original Microsoft sanctions.

But I think The Economist surprisingly pretty much captures my views this week in their article Was the big antitrust trial a waste of time? The answer was no:

But even if the settlement proves toothless, the trial has had several benefits. As with IBM's long-running antitrust case, which ended 20 years ago, its greatest impact may be felt in how the market reacted as it went on...By shining a spotlight on Microsoft's practices, the courtroom proceedings emboldened its competitors in its main market, alerted potential rivals in other markets, and forced the software company to restrain its normal behaviour towards customers and competitors alike.

Thus even without the settlement, restrictive contracts with PC makers have been dropped. Consumer mistrust has forced Microsoft to drop ambitious plans to set up a central repository of Internet users' personal information. Wariness of Microsoft's practices has boosted the fortunes of open-source software such as Linux. And Microsoft has, in effect, been frozen out of entire new industries, as its software for smart phones and television set-top boxes has been shunned.

And for those who doubted the whole argument about the harms from Microsoft's monopoly, the article makes this slam-dunk point:
What is striking is how little innovation there has been in the bits of the market that Microsoft dominates, and how much where it has little influence. Operating systems, web browsers and word-processing software all look much as they did five years ago. But not many people are using five-year-old mobile phones, handheld computers or music-sharing software.

Opponents of the case always argued that there was no evidence that Microsoft's monopoly was doing any harm. But the harm lay in the (necessarily invisible) innovation that did not occur. Conversely, much of the innovation going on in other parts of the technology industry owes a lot to Microsoft's absence.

What the whole Microsoft trial accomplished was a national debate, in the political world, in economics and in the tech world, on what we need socially from technology policy. While there was no specific agreement, the very fact that these issues became debateable was a gain from the cyberlibertarian screaming about any interference with the "free market".

Posted by Nathan at November 12, 2002 06:13 PM

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